Coronavirus threat: Pharma industry bodies seek implementation of Katoch Committee report

In 2018-19, Indian pharmaceutical companies imported bulk drugs and intermediates worth $2.4 billion from China, which accounts for about 68% of total imports of the raw materials. Following COVID-19, the industry fears pharma supply shortage, and therefore there is an urgent need to have a relook at Katoch Committee report.

The uneasy calm among the Indian pharmaceutical companies only seems to worsen as WHO chief, Tedros Adhanom Ghebreyesus warned saying that it was “impossible to predict which direction this (coronavirus) epidemic will take”. The country’s National Health Commission announced recently that the death toll from coronavirus epidemic in mainland China climbed 1,775, and the new total of confirmed infection is 70,548.

According to industry experts, the trade restrictions aimed at containing the spread could have a cascading effect on the supply chain of the Indian pharmaceutical industry. India being labelled as the pharmacy of the world, stands at a very vulnerable position in the current scenario that highlights the reality of Indian pharma industry and its heavy dependence on China for imports of bulk drugs and active pharmaceutical ingredients (APIs).

In 2018- 19, Indian pharmaceutical companies imported bulk drugs and intermediates worth $2.4 billion from China, which accounts for about 68% of total imports of the raw materials. Some major pharma companies that have a major dependency on Chinese imports are Abbott, Lupin, Sun Pharmaceuticals, Glenmark, Dr Reddy’s, Torrent and Aurobindo Pharma.

The lockdown from coronavirus outbreak did not create immediate supply shock as most large pharma companies usually keep an inventory to continue for at least two-three months. “These inventories were also planned, given lunar holidays in the last week of January / first week of February. The government is seized with the issue and all are working in an integrated way to deal with the situation. The areas being looked into are close monitoring of the developments, inventory of critical APIs /intermediates, evaluation of alternate sources where possible and regulatory approvals for environmental clearance for certain APIs where capacity available,” said IPA Secretary-General, Sudarshan Jain.

Due to trade restrictions, prices of key medicine like paracetamol, metformin, oflaxacin, metronidazole, ampicillin manufactured from the imports have already shot up by as much as 15-40 per cent. This situation takes us back to the discussions of increasing domestic production of APIs to reduce dependence on China which have been a major talking point over the last few years in the pharmaceutical sector, but has there been any progress?

Indian Drug Manufacturers' Association (IDMA) Secretary-General, Daara B. Patel said, “As of now, no headway has been made in strengthening and developing the API Industry. The government and the stakeholders will have to commit to working jointly in supporting the API industry on a war footing.” He further said that taking into consideration the huge requirement of APIs in our country and the need for prices to be extremely competitive, in our opinion no other country can be developed quickly."

According to Daara Patel, the most urgent and important support required by the API Industry is relaxation of environment control norms especially obtaining quick approval in case of a product change. “We have been requesting the government to allow us to change the product mix as long as our effluent discharge remains within the permissible limit,” he added.

The efforts towards reducing dependence on China began in 2013 when the government set up a high-level committee under Dr V.M. Katoch, former secretary, Department of Health Research. The objective was to carefully study the importance of bulk drugs and the Indian drug market’s heavy dependence on China. The committee outlined a package of interventions and concessions required to reduce dependency. The idea of setting up bulk drug parks was then proposed, based on the report submitted by Dr V.M. Katoch committee in 2015.

The year 2015 was also declared as the “Year of the API” by the department of pharmaceuticals (DoP) and reiterated the urgent need to bring about self-sufficiency in the field. Speaking about the issues experienced, Dr PV Appaji, former director-general at Pharmaceutical Export Promotion Council of India (PHARMEXCIL), said, “When I emphasised the need for indigenous production of fermentation-based antibiotics, the chairman of one of the top five Indian companies showed interest for investment, pooled up resources for several thousand crores but wanted to know whether government can extend any support. My senior officers said that no written assurance can be given in present economic policies of the country. The project was shelved.”

He believes without government assurance, private industry cannot decide to invest. The public sector was producing but those plants are also closed and cannot be renovated. "A great initiative was lost when the report of Dr Katoch’s committee could not be implemented by the government,"added Dr PV Appaji.

Around 1990, the Indian pharma industry was quite self-reliant in APIs but rigidities in Drug Price Control Order (DPCO) of circa 1995 led many manufacturers to opt-out of the API segment.

Sharing similar views on enabling domestic production, Karnataka Drugs & Pharmaceuticals Manufacturers Association’s (KDPMA) Secretary, Harish K Jain, said the Katoch Committee report needs to be implemented. “India requires end-to-end manufacturing of API within the country. For strategic reasons as well as medicine security we cannot be dependent on a single country for major supply of APIs. The plan should be in place on a war footing for NLEM Drugs to start with,” he said.

The progress on domestic production is slow and not sufficient. “Many in the pharma industry are much aware of the importance of fermentation technology for producing life-saving antibiotics. We are almost at zero level in fermentation technology in the pharma sector. This needs to be restarted first, for the survival of the population of our country, concluded Dr Appaji.

Labelled as the "pharmacy of the developing world" for providing affordable generic medicines , Indian pharmaceutical market can come to a stand still if it does not prioritise domestic production of APIs to reduce the dependence on a single country. India needs to take urgent corrective measure to provide an enabling environment for mega bulk drug parks and bring in a focussed policy and concessions to promote sustainability.